Daily Technical Update
January 25, 2010 (EUR/USD) Stalking Correction Rally; Risk Assessment



* 4H: The EUR/USD is possibly in a correction rally. It surely can be anticipated as one because the general mode in the intermediate term is bearish. (Refer to Weekly Technical Update 1.22.2010).
* The 4H time-frame shows stochastic turning from overbought levels and the parabolic SAR (0.02, 0.2) is about to give a bearish signal. Price action is topping, but there still can be another swing towards 1.4250. Currently however, the momentum is slowing suggesting the market may be ready to continue declining.
* 1H: Although it may be premature, it doesn’t hurt to assess the bearish case in particular the reward risk ratio.
* Using the 1.4220 powerline, we find 3 ATR above is about the 1.4300 level. The swing projection seen in 4H chart, is 1.38. The reward-risk ratio if the trigger closes at 1.4110 then would be approximately 1.6:1 (320 to 200 pips).



Fan Yang
Currency Analyst
Commodity Trading Advisor

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